Pt. 332 33 CFR Ch. II (7–1–12 Edition) · Army, acting through the Chief of En- ... alter the regulations at §320.4(r) of this title, which address the general mitiga-tion requirements

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33 CFR Ch. II (7–1–12 Edition) Pt. 332

PART 332—COMPENSATORY MITI-GATION FOR LOSSES OF AQUAT-IC RESOURCES

Sec. 332.1 Purpose and general considerations. 332.2 Definitions. 332.3 General compensatory mitigation re-

quirements. 332.4 Planning and documentation. 332.5 Ecological performance standards. 332.6 Monitoring. 332.7 Management. 332.8 Mitigation banks and in-lieu fee pro-

grams.

AUTHORITY: 33 U.S.C. 401 et seq.; 33 U.S.C. 1344; and Pub. L. 108–136.

SOURCE: 73 FR 19670, Apr. 10, 2008, unless otherwise noted.

§ 332.1 Purpose and general consider-ations.

(a) Purpose. (1) The purpose of this part is to establish standards and cri-teria for the use of all types of compen-satory mitigation, including on-site and off-site permittee-responsible miti-gation, mitigation banks, and in-lieu fee mitigation to offset unavoidable impacts to waters of the United States authorized through the issuance of De-partment of the Army (DA) permits pursuant to section 404 of the Clean Water Act (33 U.S.C. 1344) and/or sec-tions 9 or 10 of the Rivers and Harbors Act of 1899 (33 U.S.C. 401, 403). This part implements section 314(b) of the 2004 National Defense Authorization Act (Pub. L. 108–136), which directs that the standards and criteria shall, to the maximum extent practicable, maxi-mize available credits and opportuni-ties for mitigation, provide for regional variations in wetland conditions, func-tions, and values, and apply equivalent standards and criteria to each type of compensatory mitigation. This part is intended to further clarify mitigation requirements established under U.S. Army Corps of Engineers (Corps) and U.S. Environmental Protection Agency (U.S. EPA) regulations at 33 CFR part 320 and 40 CFR part 230, respectively.

(2) This part has been jointly devel-oped by the Secretary of the Army, acting through the Chief of Engineers, and the Administrator of the Environ-mental Protection Agency. From time to time guidance on interpreting and implementing this part may be pre-

pared jointly by U.S. EPA and the Corps at the national or regional level. No modifications to the basic applica-tion, meaning, or intent of this part will be made without further joint rulemaking by the Secretary of the Army, acting through the Chief of En-gineers and the Administrator of the Environmental Protection Agency, pursuant to the Administrative Proce-dure Act (5 U.S.C. 551 et seq.).

(b) Applicability. This part does not alter the regulations at § 320.4(r) of this title, which address the general mitiga-tion requirements for DA permits. In particular, it does not alter the cir-cumstances under which compensatory mitigation is required or the defini-tions of ‘‘waters of the United States’’ or ‘‘navigable waters of the United States,’’ which are provided at parts 328 and 329 of this chapter, respec-tively. Use of resources as compen-satory mitigation that are not other-wise subject to regulation under sec-tion 404 of the Clean Water Act and/or sections 9 or 10 of the Rivers and Har-bors Act of 1899 does not in and of itself make them subject to such regulation.

(c) Sequencing. (1) Nothing in this sec-tion affects the requirement that all DA permits subject to section 404 of the Clean Water Act comply with ap-plicable provisions of the Section 404(b)(1) Guidelines at 40 CFR part 230.

(2) Pursuant to these requirements, the district engineer will issue an indi-vidual section 404 permit only upon a determination that the proposed dis-charge complies with applicable provi-sions of 40 CFR part 230, including those which require the permit appli-cant to take all appropriate and prac-ticable steps to avoid and minimize ad-verse impacts to waters of the United States. Practicable means available and capable of being done after taking into consideration cost, existing tech-nology, and logistics in light of overall project purposes. Compensatory miti-gation for unavoidable impacts may be required to ensure that an activity re-quiring a section 404 permit complies with the Section 404(b)(1) Guidelines.

(3) Compensatory mitigation for un-avoidable impacts may be required to ensure that an activity requiring a sec-tion 404 permit complies with the Sec-tion 404(b)(1) Guidelines. During the

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Corps of Engineers, Dept. of the Army, DoD § 332.2

404(b)(1) Guidelines compliance anal-ysis, the district engineer may deter-mine that a DA permit for the proposed activity cannot be issued because of the lack of appropriate and practicable compensatory mitigation options.

(d) Public interest. Compensatory mitigation may also be required to en-sure that an activity requiring author-ization under section 404 of the Clean Water Act and/or sections 9 or 10 of the Rivers and Harbors Act of 1899 is not contrary to the public interest.

(e) Accounting for regional variations. Where appropriate, district engineers shall account for regional characteris-tics of aquatic resource types, func-tions and services when determining performance standards and monitoring requirements for compensatory mitiga-tion projects.

(f) Relationship to other guidance docu-ments. (1) This part applies instead of the ‘‘Federal Guidance for the Estab-lishment, Use, and Operation of Mitiga-tion Banks,’’ which was issued on No-vember 28, 1995, the ‘‘Federal Guidance on the Use of In-Lieu Fee Arrange-ments for Compensatory Mitigation Under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act,’’ which was issued on No-vember 7, 2000, and Regulatory Guid-ance Letter 02–02, ‘‘Guidance on Com-pensatory Mitigation Projects for Aquatic Resource Impacts Under the Corps Regulatory Program Pursuant to Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act of 1899’’ which was issued on De-cember 24, 2002. These guidance docu-ments are no longer to be used as com-pensatory mitigation policy in the Corps Regulatory Program.

(2) In addition, this part also applies instead of the provisions relating to the amount, type, and location of com-pensatory mitigation projects, includ-ing the use of preservation, in the Feb-ruary 6, 1990, Memorandum of Agree-ment (MOA) between the Department of the Army and the Environmental Protection Agency on the Determina-tion of Mitigation Under the Clean Water Act Section 404(b)(1) Guidelines. All other provisions of this MOA re-main in effect.

§ 332.2 Definitions. For the purposes of this part, the fol-

lowing terms are defined: Adaptive management means the de-

velopment of a management strategy that anticipates likely challenges asso-ciated with compensatory mitigation projects and provides for the imple-mentation of actions to address those challenges, as well as unforeseen changes to those projects. It requires consideration of the risk, uncertainty, and dynamic nature of compensatory mitigation projects and guides modi-fication of those projects to optimize performance. It includes the selection of appropriate measures that will en-sure that the aquatic resource func-tions are provided and involves anal-ysis of monitoring results to identify potential problems of a compensatory mitigation project and the identifica-tion and implementation of measures to rectify those problems.

Advance credits means any credits of an approved in-lieu fee program that are available for sale prior to being ful-filled in accordance with an approved mitigation project plan. Advance cred-it sales require an approved in-lieu fee program instrument that meets all ap-plicable requirements including a spe-cific allocation of advance credits, by service area where applicable. The in-strument must also contain a schedule for fulfillment of advance credit sales.

Buffer means an upland, wetland, and/or riparian area that protects and/ or enhances aquatic resource functions associated with wetlands, rivers, streams, lakes, marine, and estuarine systems from disturbances associated with adjacent land uses.

Compensatory mitigation means the restoration (re-establishment or reha-bilitation), establishment (creation), enhancement, and/or in certain cir-cumstances preservation of aquatic re-sources for the purposes of offsetting unavoidable adverse impacts which re-main after all appropriate and prac-ticable avoidance and minimization has been achieved.

Compensatory mitigation project means compensatory mitigation implemented by the permittee as a requirement of a DA permit (i.e., permittee-responsible mitigation), or by a mitigation bank or an in-lieu fee program.


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33 CFR Ch. II (7–1–12 Edition) § 332.2

Condition means the relative ability of an aquatic resource to support and maintain a community of organisms having a species composition, diver-sity, and functional organization com-parable to reference aquatic resources in the region.

Credit means a unit of measure (e.g., a functional or areal measure or other suitable metric) representing the ac-crual or attainment of aquatic func-tions at a compensatory mitigation site. The measure of aquatic functions is based on the resources restored, es-tablished, enhanced, or preserved.

DA means Department of the Army. Days means calendar days. Debit means a unit of measure (e.g., a

functional or areal measure or other suitable metric) representing the loss of aquatic functions at an impact or project site. The measure of aquatic functions is based on the resources im-pacted by the authorized activity.

Enhancement means the manipulation of the physical, chemical, or biological characteristics of an aquatic resource to heighten, intensify, or improve a specific aquatic resource function(s). Enhancement results in the gain of se-lected aquatic resource function(s), but may also lead to a decline in other aquatic resource function(s). Enhance-ment does not result in a gain in aquatic resource area.

Establishment (creation) means the manipulation of the physical, chem-ical, or biological characteristics present to develop an aquatic resource that did not previously exist at an up-land site. Establishment results in a gain in aquatic resource area and func-tions.

Fulfillment of advance credit sales of an in-lieu fee program means application of credits released in accordance with a credit release schedule in an approved mitigation project plan to satisfy the mitigation requirements represented by the advance credits. Only after any advance credit sales within a service area have been fulfilled through the ap-plication of released credits from an in- lieu fee project (in accordance with the credit release schedule for an approved mitigation project plan), may addi-tional released credits from that project be sold or transferred to per-mittees. When advance credits are ful-

filled, an equal number of new advance credits is restored to the program spon-sor for sale or transfer to permit appli-cants.

Functional capacity means the degree to which an area of aquatic resource performs a specific function.

Functions means the physical, chem-ical, and biological processes that occur in ecosystems.

Impact means adverse effect. In-kind means a resource of a similar

structural and functional type to the impacted resource.

In-lieu fee program means a program involving the restoration, establish-ment, enhancement, and/or preserva-tion of aquatic resources through funds paid to a governmental or non-profit natural resources management entity to satisfy compensatory mitigation re-quirements for DA permits. Similar to a mitigation bank, an in-lieu fee pro-gram sells compensatory mitigation credits to permittees whose obligation to provide compensatory mitigation is then transferred to the in-lieu program sponsor. However, the rules governing the operation and use of in-lieu fee pro-grams are somewhat different from the rules governing operation and use of mitigation banks. The operation and use of an in-lieu fee program are gov-erned by an in-lieu fee program instru-ment.

In-lieu fee program instrument means the legal document for the establish-ment, operation, and use of an in-lieu fee program.

Instrument means mitigation banking instrument or in-lieu fee program in-strument.

Interagency Review Team (IRT) means an interagency group of federal, tribal, state, and/or local regulatory and re-source agency representatives that re-views documentation for, and advises the district engineer on, the establish-ment and management of a mitigation bank or an in-lieu fee program.

Mitigation bank means a site, or suite of sites, where resources (e.g., wet-lands, streams, riparian areas) are re-stored, established, enhanced, and/or preserved for the purpose of providing compensatory mitigation for impacts authorized by DA permits. In general, a mitigation bank sells compensatory mitigation credits to permittees whose


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obligation to provide compensatory mitigation is then transferred to the mitigation bank sponsor. The oper-ation and use of a mitigation bank are governed by a mitigation banking in-strument.

Mitigation banking instrument means the legal document for the establish-ment, operation, and use of a mitiga-tion bank.

Off-site means an area that is neither located on the same parcel of land as the impact site, nor on a parcel of land contiguous to the parcel containing the impact site.

On-site means an area located on the same parcel of land as the impact site, or on a parcel of land contiguous to the impact site.

Out-of-kind means a resource of a dif-ferent structural and functional type from the impacted resource.

Performance standards are observable or measurable physical (including hydrological), chemical and/or biologi-cal attributes that are used to deter-mine if a compensatory mitigation project meets its objectives.

Permittee-responsible mitigation means an aquatic resource restoration, estab-lishment, enhancement, and/or preser-vation activity undertaken by the per-mittee (or an authorized agent or con-tractor) to provide compensatory miti-gation for which the permittee retains full responsibility.

Preservation means the removal of a threat to, or preventing the decline of, aquatic resources by an action in or near those aquatic resources. This term includes activities commonly as-sociated with the protection and main-tenance of aquatic resources through the implementation of appropriate legal and physical mechanisms. Preser-vation does not result in a gain of aquatic resource area or functions.

Re-establishment means the manipula-tion of the physical, chemical, or bio-logical characteristics of a site with the goal of returning natural/historic functions to a former aquatic resource. Re-establishment results in rebuilding a former aquatic resource and results in a gain in aquatic resource area and functions.

Reference aquatic resources are a set of aquatic resources that represent the full range of variability exhibited by a

regional class of aquatic resources as a result of natural processes and anthro-pogenic disturbances.

Rehabilitation means the manipula-tion of the physical, chemical, or bio-logical characteristics of a site with the goal of repairing natural/historic functions to a degraded aquatic re-source. Rehabilitation results in a gain in aquatic resource function, but does not result in a gain in aquatic resource area.

Release of credits means a determina-tion by the district engineer, in con-sultation with the IRT, that credits as-sociated with an approved mitigation plan are available for sale or transfer, or in the case of an in-lieu fee program, for fulfillment of advance credit sales. A proportion of projected credits for a specific mitigation bank or in-lieu fee project may be released upon approval of the mitigation plan, with additional credits released as milestones specified in the credit release schedule are achieved.

Restoration means the manipulation of the physical, chemical, or biological characteristics of a site with the goal of returning natural/historic functions to a former or degraded aquatic re-source. For the purpose of tracking net gains in aquatic resource area, restora-tion is divided into two categories: re- establishment and rehabilitation.

Riparian areas are lands adjacent to streams, rivers, lakes, and estuarine- marine shorelines. Riparian areas pro-vide a variety of ecological functions and services and help improve or main-tain local water quality.

Service area means the geographic area within which impacts can be miti-gated at a specific mitigation bank or an in-lieu fee program, as designated in its instrument.

Services mean the benefits that human populations receive from func-tions that occur in ecosystems.

Sponsor means any public or private entity responsible for establishing, and in most circumstances, operating a mitigation bank or in-lieu fee program.

Standard permit means a standard, in-dividual permit issued under the au-thority of section 404 of the Clean Water Act and/or sections 9 or 10 of the Rivers and Harbors Act of 1899.


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33 CFR Ch. II (7–1–12 Edition) § 332.3

Temporal loss is the time lag between the loss of aquatic resource functions caused by the permitted impacts and the replacement of aquatic resource functions at the compensatory mitiga-tion site. Higher compensation ratios may be required to compensate for temporal loss. When the compensatory mitigation project is initiated prior to, or concurrent with, the permitted im-pacts, the district engineer may deter-mine that compensation for temporal loss is not necessary, unless the re-source has a long development time.

Watershed means a land area that drains to a common waterway, such as a stream, lake, estuary, wetland, or ul-timately the ocean.

Watershed approach means an analyt-ical process for making compensatory mitigation decisions that support the sustainability or improvement of aquatic resources in a watershed. It in-volves consideration of watershed needs, and how locations and types of compensatory mitigation projects ad-dress those needs. A landscape perspec-tive is used to identify the types and locations of compensatory mitigation projects that will benefit the watershed and offset losses of aquatic resource functions and services caused by activi-ties authorized by DA permits. The wa-tershed approach may involve consider-ation of landscape scale, historic and potential aquatic resource conditions, past and projected aquatic resource im-pacts in the watershed, and terrestrial connections between aquatic resources when determining compensatory miti-gation requirements for DA permits.

Watershed plan means a plan devel-oped by federal, tribal, state, and/or local government agencies or appro-priate non-governmental organiza-tions, in consultation with relevant stakeholders, for the specific goal of aquatic resource restoration, establish-ment, enhancement, and preservation. A watershed plan addresses aquatic re-source conditions in the watershed, multiple stakeholder interests, and land uses. Watershed plans may also identify priority sites for aquatic re-source restoration and protection. Ex-amples of watershed plans include spe-cial area management plans, advance identification programs, and wetland management plans.

§ 332.3 General compensatory mitiga-tion requirements.

(a) General considerations. (1) The fun-damental objective of compensatory mitigation is to offset environmental losses resulting from unavoidable im-pacts to waters of the United States authorized by DA permits. The district engineer must determine the compen-satory mitigation to be required in a DA permit, based on what is prac-ticable and capable of compensating for the aquatic resource functions that will be lost as a result of the permitted activity. When evaluating compen-satory mitigation options, the district engineer will consider what would be environmentally preferable. In making this determination, the district engi-neer must assess the likelihood for eco-logical success and sustainability, the location of the compensation site rel-ative to the impact site and their sig-nificance within the watershed, and the costs of the compensatory mitigation project. In many cases, the environ-mentally preferable compensatory mitigation may be provided through mitigation banks or in-lieu fee pro-grams because they usually involve consolidating compensatory mitigation projects where ecologically appro-priate, consolidating resources, pro-viding financial planning and scientific expertise (which often is not practical for permittee-responsible compen-satory mitigation projects), reducing temporal losses of functions, and re-ducing uncertainty over project suc-cess. Compensatory mitigation require-ments must be commensurate with the amount and type of impact that is as-sociated with a particular DA permit. Permit applicants are responsible for proposing an appropriate compensatory mitigation option to offset unavoidable impacts.

(2) Compensatory mitigation may be performed using the methods of res-toration, enhancement, establishment, and in certain circumstances preserva-tion. Restoration should generally be the first option considered because the likelihood of success is greater and the impacts to potentially ecologically im-portant uplands are reduced compared to establishment, and the potential gains in terms of aquatic resource


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functions are greater, compared to en-hancement and preservation.

(3) Compensatory mitigation projects may be sited on public or private lands. Credits for compensatory mitigation projects on public land must be based solely on aquatic resource functions provided by the compensatory mitiga-tion project, over and above those pro-vided by public programs already planned or in place. All compensatory mitigation projects must comply with the standards in this part, if they are to be used to provide compensatory mitigation for activities authorized by DA permits, regardless of whether they are sited on public or private lands and whether the sponsor is a governmental or private entity.

(b) Type and location of compensatory mitigation. (1) When considering options for successfully providing the required compensatory mitigation, the district engineer shall consider the type and lo-cation options in the order presented in paragraphs (b)(2) through (b)(6) of this section. In general, the required com-pensatory mitigation should be located within the same watershed as the im-pact site, and should be located where it is most likely to successfully replace lost functions and services, taking into account such watershed scale features as aquatic habitat diversity, habitat connectivity, relationships to hydro-logic sources (including the avail-ability of water rights), trends in land use, ecological benefits, and compat-ibility with adjacent land uses. When compensating for impacts to marine resources, the location of the compen-satory mitigation site should be chosen to replace lost functions and services within the same marine ecological sys-tem (e.g., reef complex, littoral drift cell). Compensation for impacts to aquatic resources in coastal watersheds (watersheds that include a tidal water body) should also be located in a coast-al watershed where practicable. Com-pensatory mitigation projects should not be located where they will increase risks to aviation by attracting wildlife to areas where aircraft-wildlife strikes may occur (e.g., near airports).

(2) Mitigation bank credits. When per-mitted impacts are located within the service area of an approved mitigation bank, and the bank has the appropriate

number and resource type of credits available, the permittee’s compen-satory mitigation requirements may be met by securing those credits from the sponsor. Since an approved instrument (including an approved mitigation plan and appropriate real estate and finan-cial assurances) for a mitigation bank is required to be in place before its credits can begin to be used to com-pensate for authorized impacts, use of a mitigation bank can help reduce risk and uncertainty, as well as temporal loss of resource functions and services. Mitigation bank credits are not re-leased for debiting until specific mile-stones associated with the mitigation bank site’s protection and development are achieved, thus use of mitigation bank credits can also help reduce risk that mitigation will not be fully suc-cessful. Mitigation banks typically in-volve larger, more ecologically valu-able parcels, and more rigorous sci-entific and technical analysis, planning and implementation than permittee-re-sponsible mitigation. Also, develop-ment of a mitigation bank requires site identification in advance, project-spe-cific planning, and significant invest-ment of financial resources that is often not practicable for many in-lieu fee programs. For these reasons, the district engineer should give preference to the use of mitigation bank credits when these considerations are applica-ble. However, these same consider-ations may also be used to override this preference, where appropriate, as, for example, where an in-lieu fee pro-gram has released credits available from a specific approved in-lieu fee project, or a permittee-responsible project will restore an outstanding re-source based on rigorous scientific and technical analysis.

(3) In-lieu fee program credits. Where permitted impacts are located within the service area of an approved in-lieu fee program, and the sponsor has the appropriate number and resource type of credits available, the permittee’s compensatory mitigation requirements may be met by securing those credits from the sponsor. Where permitted im-pacts are not located in the service area of an approved mitigation bank, or the approved mitigation bank does not have the appropriate number and


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33 CFR Ch. II (7–1–12 Edition) § 332.3

resource type of credits available to offset those impacts, in-lieu fee mitiga-tion, if available, is generally pref-erable to permittee-responsible mitiga-tion. In-lieu fee projects typically in-volve larger, more ecologically valu-able parcels, and more rigorous sci-entific and technical analysis, planning and implementation than permittee-re-sponsible mitigation. They also devote significant resources to identifying and addressing high-priority resource needs on a watershed scale, as reflected in their compensation planning frame-work. For these reasons, the district engineer should give preference to in- lieu fee program credits over per-mittee-responsible mitigation, where these considerations are applicable. However, as with the preference for mitigation bank credits, these same considerations may be used to override this preference where appropriate. Ad-ditionally, in cases where permittee-re-sponsible mitigation is likely to suc-cessfully meet performance standards before advance credits secured from an in-lieu fee program are fulfilled, the district engineer should also give con-sideration to this factor in deciding be-tween in-lieu fee mitigation and per-mittee-responsible mitigation.

(4) Permittee-responsible mitigation under a watershed approach. Where per-mitted impacts are not in the service area of an approved mitigation bank or in-lieu fee program that has the appro-priate number and resource type of credits available, permittee-responsible mitigation is the only option. Where practicable and likely to be successful and sustainable, the resource type and location for the required permittee-re-sponsible compensatory mitigation should be determined using the prin-ciples of a watershed approach as out-lined in paragraph (c) of this section.

(5) Permittee-responsible mitigation through on-site and in-kind mitigation. In cases where a watershed approach is not practicable, the district engineer should consider opportunities to offset anticipated aquatic resource impacts by requiring on-site and in-kind com-pensatory mitigation. The district en-gineer must also consider the practica-bility of on-site compensatory mitiga-tion and its compatibility with the pro-posed project.

(6) Permittee-responsible mitigation through off-site and/or out-of-kind mitiga-tion. If, after considering opportunities for on-site, in-kind compensatory miti-gation as provided in paragraph (b)(5) of this section, the district engineer de-termines that these compensatory mitigation opportunities are not prac-ticable, are unlikely to compensate for the permitted impacts, or will be in-compatible with the proposed project, and an alternative, practicable off-site and/or out-of-kind mitigation oppor-tunity is identified that has a greater likelihood of offsetting the permitted impacts or is environmentally pref-erable to on-site or in-kind mitigation, the district engineer should require that this alternative compensatory mitigation be provided.

(c) Watershed approach to compen-satory mitigation. (1) The district engi-neer must use a watershed approach to establish compensatory mitigation re-quirements in DA permits to the ex-tent appropriate and practicable. Where a watershed plan is available, the district engineer will determine whether the plan is appropriate for use in the watershed approach for compen-satory mitigation. In cases where the district engineer determines that an appropriate watershed plan is avail-able, the watershed approach should be based on that plan. Where no such plan is available, the watershed approach should be based on information pro-vided by the project sponsor or avail-able from other sources. The ultimate goal of a watershed approach is to maintain and improve the quality and quantity of aquatic resources within watersheds through strategic selection of compensatory mitigation sites.

(2) Considerations. (i) A watershed ap-proach to compensatory mitigation considers the importance of landscape position and resource type of compen-satory mitigation projects for the sus-tainability of aquatic resource func-tions within the watershed. Such an approach considers how the types and locations of compensatory mitigation projects will provide the desired aquat-ic resource functions, and will continue to function over time in a changing landscape. It also considers the habitat requirements of important species, habitat loss or conversion trends,


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sources of watershed impairment, and current development trends, as well as the requirements of other regulatory and non-regulatory programs that af-fect the watershed, such as storm water management or habitat con-servation programs. It includes the protection and maintenance of terres-trial resources, such as non-wetland ri-parian areas and uplands, when those resources contribute to or improve the overall ecological functioning of aquat-ic resources in the watershed. Compen-satory mitigation requirements deter-mined through the watershed approach should not focus exclusively on specific functions (e.g., water quality or habi-tat for certain species), but should pro-vide, where practicable, the suite of functions typically provided by the af-fected aquatic resource.

(ii) Locational factors (e.g., hydrol-ogy, surrounding land use) are impor-tant to the success of compensatory mitigation for impacted habitat func-tions and may lead to siting of such mitigation away from the project area. However, consideration should also be given to functions and services (e.g., water quality, flood control, shoreline protection) that will likely need to be addressed at or near the areas im-pacted by the permitted impacts.

(iii) A watershed approach may in-clude on-site compensatory mitigation, off-site compensatory mitigation (in-cluding mitigation banks or in-lieu fee programs), or a combination of on-site and off-site compensatory mitigation.

(iv) A watershed approach to compen-satory mitigation should include, to the extent practicable, inventories of historic and existing aquatic resources, including identification of degraded aquatic resources, and identification of immediate and long-term aquatic re-source needs within watersheds that can be met through permittee-respon-sible mitigation projects, mitigation banks, or in-lieu fee programs. Plan-ning efforts should identify and prioritize aquatic resource restoration, establishment, and enhancement ac-tivities, and preservation of existing aquatic resources that are important for maintaining or improving ecologi-cal functions of the watershed. The identification and prioritization of re-source needs should be as specific as

possible, to enhance the usefulness of the approach in determining compen-satory mitigation requirements.

(v) A watershed approach is not ap-propriate in areas where watershed boundaries do not exist, such as marine areas. In such cases, an appropriate spatial scale should be used to replace lost functions and services within the same ecological system (e.g., reef com-plex, littoral drift cell).

(3) Information needs. (i) In the ab-sence of a watershed plan determined by the district engineer under para-graph (c)(1) of this section to be appro-priate for use in the watershed ap-proach, the district engineer will use a watershed approach based on analysis of information regarding watershed conditions and needs, including poten-tial sites for aquatic resource restora-tion activities and priorities for aquat-ic resource restoration and preserva-tion. Such information includes: cur-rent trends in habitat loss or conver-sion; cumulative impacts of past devel-opment activities, current develop-ment trends, the presence and needs of sensitive species; site conditions that favor or hinder the success of compen-satory mitigation projects; and chronic environmental problems such as flood-ing or poor water quality.

(ii) This information may be avail-able from sources such as wetland maps; soil surveys; U.S. Geological Survey topographic and hydrologic maps; aerial photographs; information on rare, endangered and threatened species and critical habitat; local eco-logical reports or studies; and other in-formation sources that could be used to identify locations for suitable compen-satory mitigation projects in the wa-tershed.

(iii) The level of information and analysis needed to support a watershed approach must be commensurate with the scope and scale of the proposed im-pacts requiring a DA permit, as well as the functions lost as a result of those impacts.

(4) Watershed scale. The size of water-shed addressed using a watershed ap-proach should not be larger than is ap-propriate to ensure that the aquatic re-sources provided through compensation activities will effectively compensate


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33 CFR Ch. II (7–1–12 Edition) § 332.3

for adverse environmental impacts re-sulting from activities authorized by DA permits. The district engineer should consider relevant environ-mental factors and appropriate locally developed standards and criteria when determining the appropriate watershed scale in guiding compensation activi-ties.

(d) Site selection. (1) The compen-satory mitigation project site must be ecologically suitable for providing the desired aquatic resource functions. In determining the ecological suitability of the compensatory mitigation project site, the district engineer must con-sider, to the extent practicable, the fol-lowing factors:

(i) Hydrological conditions, soil char-acteristics, and other physical and chemical characteristics;

(ii) Watershed-scale features, such as aquatic habitat diversity, habitat connectivity, and other landscape scale functions;

(iii) The size and location of the com-pensatory mitigation site relative to hydrologic sources (including the availability of water rights) and other ecological features;

(iv) Compatibility with adjacent land uses and watershed management plans;

(v) Reasonably foreseeable effects the compensatory mitigation project will have on ecologically important aquatic or terrestrial resources (e.g., shallow sub-tidal habitat, mature forests), cul-tural sites, or habitat for federally- or state-listed threatened and endangered species; and

(vi) Other relevant factors including, but not limited to, development trends, anticipated land use changes, habitat status and trends, the relative loca-tions of the impact and mitigation sites in the stream network, local or regional goals for the restoration or protection of particular habitat types or functions (e.g., re-establishment of habitat corridors or habitat for species of concern), water quality goals, flood-plain management goals, and the rel-ative potential for chemical contami-nation of the aquatic resources.

(2) District engineers may require on- site, off-site, or a combination of on- site and off-site compensatory mitiga-tion to replace permitted losses of

aquatic resource functions and serv-ices.

(3) Applicants should propose com-pensation sites adjacent to existing aquatic resources or where aquatic re-sources previously existed.

(e) Mitigation type. (1) In general, in- kind mitigation is preferable to out-of- kind mitigation because it is most likely to compensate for the functions and services lost at the impact site. For example, tidal wetland compen-satory mitigation projects are most likely to compensate for unavoidable impacts to tidal wetlands, while peren-nial stream compensatory mitigation projects are most likely to compensate for unavoidable impacts to perennial streams. Thus, except as provided in paragraph (e)(2) of this section, the re-quired compensatory mitigation shall be of a similar type to the affected aquatic resource.

(2) If the district engineer deter-mines, using the watershed approach in accordance with paragraph (c) of this section that out-of-kind compensatory mitigation will serve the aquatic re-source needs of the watershed, the dis-trict engineer may authorize the use of such out-of-kind compensatory mitiga-tion. The basis for authorization of out-of-kind compensatory mitigation must be documented in the administra-tive record for the permit action.

(3) For difficult-to-replace resources (e.g., bogs, fens, springs, streams, At-lantic white cedar swamps) if further avoidance and minimization is not practicable, the required compensation should be provided, if practicable, through in-kind rehabilitation, en-hancement, or preservation since there is greater certainty that these methods of compensation will successfully off-set permitted impacts.

(f) Amount of compensatory mitigation. (1) If the district engineer determines that compensatory mitigation is nec-essary to offset unavoidable impacts to aquatic resources, the amount of re-quired compensatory mitigation must be, to the extent practicable, sufficient to replace lost aquatic resource func-tions. In cases where appropriate func-tional or condition assessment meth-ods or other suitable metrics are avail-able, these methods should be used where practicable to determine how


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much compensatory mitigation is re-quired. If a functional or condition as-sessment or other suitable metric is not used, a minimum one-to-one acre-age or linear foot compensation ratio must be used.

(2) The district engineer must require a mitigation ratio greater than one-to- one where necessary to account for the method of compensatory mitigation (e.g., preservation), the likelihood of success, differences between the func-tions lost at the impact site and the functions expected to be produced by the compensatory mitigation project, temporal losses of aquatic resource functions, the difficulty of restoring or establishing the desired aquatic re-source type and functions, and/or the distance between the affected aquatic resource and the compensation site. The rationale for the required replace-ment ratio must be documented in the administrative record for the permit action.

(3) If an in-lieu fee program will be used to provide the required compen-satory mitigation, and the appropriate number and resource type of released credits are not available, the district engineer must require sufficient com-pensation to account for the risk and uncertainty associated with in-lieu fee projects that have not been imple-mented before the permitted impacts have occurred.

(g) Use of mitigation banks and in-lieu fee programs. Mitigation banks and in- lieu fee programs may be used to com-pensate for impacts to aquatic re-sources authorized by general permits and individual permits, including after- the-fact permits, in accordance with the preference hierarchy in paragraph (b) of this section.

(h) Preservation. (1) Preservation may be used to provide compensatory miti-gation for activities authorized by DA permits when all the following criteria are met:

(i) The resources to be preserved pro-vide important physical, chemical, or biological functions for the watershed;

(ii) The resources to be preserved contribute significantly to the ecologi-cal sustainability of the watershed. In determining the contribution of those resources to the ecological sustain-ability of the watershed, the district

engineer must use appropriate quan-titative assessment tools, where avail-able;

(iii) Preservation is determined by the district engineer to be appropriate and practicable;

(iv) The resources are under threat of destruction or adverse modifications; and

(v) The preserved site will be perma-nently protected through an appro-priate real estate or other legal instru-ment (e.g., easement, title transfer to state resource agency or land trust).

(2) Where preservation is used to pro-vide compensatory mitigation, to the extent appropriate and practicable the preservation shall be done in conjunc-tion with aquatic resource restoration, establishment, and/or enhancement ac-tivities. This requirement may be waived by the district engineer where preservation has been identified as a high priority using a watershed ap-proach described in paragraph (c) of this section, but compensation ratios shall be higher.

(i) Buffers. District engineers may re-quire the restoration, establishment, enhancement, and preservation, as well as the maintenance, of riparian areas and/or buffers around aquatic resources where necessary to ensure the long- term viability of those resources. Buff-ers may also provide habitat or cor-ridors necessary for the ecological functioning of aquatic resources. If buffers are required by the district en-gineer as part of the compensatory mitigation project, compensatory miti-gation credit will be provided for those buffers.

(j) Relationship to other federal, tribal, state, and local programs. (1) Compen-satory mitigation projects for DA per-mits may also be used to satisfy the environmental requirements of other programs, such as tribal, state, or local wetlands regulatory programs, other federal programs such as the Surface Mining Control and Reclamation Act, Corps civil works projects, and Depart-ment of Defense military construction projects, consistent with the terms and requirements of these programs and subject to the following considerations:

(i) The compensatory mitigation project must include appropriate com-pensation required by the DA permit


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33 CFR Ch. II (7–1–12 Edition) § 332.3

for unavoidable impacts to aquatic re-sources authorized by that permit.

(ii) Under no circumstances may the same credits be used to provide mitiga-tion for more than one permitted activ-ity. However, where appropriate, com-pensatory mitigation projects, includ-ing mitigation banks and in-lieu fee projects, may be designed to holis-tically address requirements under multiple programs and authorities for the same activity.

(2) Except for projects undertaken by federal agencies, or where federal fund-ing is specifically authorized to provide compensatory mitigation, federally- funded aquatic resource restoration or conservation projects undertaken for purposes other than compensatory mitigation, such as the Wetlands Re-serve Program, Conservation Reserve Program, and Partners for Wildlife Program activities, cannot be used for the purpose of generating compen-satory mitigation credits for activities authorized by DA permits. However, compensatory mitigation credits may be generated by activities undertaken in conjunction with, but supplemental to, such programs in order to maximize the overall ecological benefits of the restoration or conservation project.

(3) Compensatory mitigation projects may also be used to provide compen-satory mitigation under the Endan-gered Species Act or for Habitat Con-servation Plans, as long as they com-ply with the requirements of paragraph (j)(1) of this section.

(k) Permit conditions. (1) The compen-satory mitigation requirements for a DA permit, including the amount and type of compensatory mitigation, must be clearly stated in the special condi-tions of the individual permit or gen-eral permit verification (see 33 CFR 325.4 and 330.6(a)). The special condi-tions must be enforceable.

(2) For an individual permit that re-quires permittee-responsible mitiga-tion, the special conditions must:

(i) Identify the party responsible for providing the compensatory mitiga-tion;

(ii) Incorporate, by reference, the final mitigation plan approved by the district engineer;

(iii) State the objectives, perform-ance standards, and monitoring re-

quired for the compensatory mitiga-tion project, unless they are provided in the approved final mitigation plan; and

(iv) Describe any required financial assurances or long-term management provisions for the compensatory miti-gation project, unless they are speci-fied in the approved final mitigation plan.

(3) For a general permit activity that requires permittee-responsible compen-satory mitigation, the special condi-tions must describe the compensatory mitigation proposal, which may be ei-ther conceptual or detailed. The gen-eral permit verification must also in-clude a special condition that states that the permittee cannot commence work in waters of the United States until the district engineer approves the final mitigation plan, unless the dis-trict engineer determines that such a special condition is not practicable and not necessary to ensure timely comple-tion of the required compensatory mitigation. To the extent appropriate and practicable, special conditions of the general permit verification should also address the requirements of para-graph (k)(2) of this section.

(4) If a mitigation bank or in-lieu fee program is used to provide the required compensatory mitigation, the special conditions must indicate whether a mitigation bank or in-lieu fee program will be used, and specify the number and resource type of credits the per-mittee is required to secure. In the case of an individual permit, the spe-cial condition must also identify the specific mitigation bank or in-lieu fee program that will be used. For general permit verifications, the special condi-tions may either identify the specific mitigation bank or in-lieu fee program, or state that the specific mitigation bank or in-lieu fee program used to provide the required compensatory mitigation must be approved by the district engineer before the credits are secured.

(l) Party responsible for compensatory mitigation. (1) For permittee-respon-sible mitigation, the special conditions of the DA permit must clearly indicate the party or parties responsible for the implementation, performance, and


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long-term management of the compen-satory mitigation project.

(2) For mitigation banks and in-lieu fee programs, the instrument must clearly indicate the party or parties re-sponsible for the implementation, per-formance, and long-term management of the compensatory mitigation project(s). The instrument must also contain a provision expressing the sponsor’s agreement to assume respon-sibility for a permittee’s compensatory mitigation requirements, once that permittee has secured the appropriate number and resource type of credits from the sponsor and the district engi-neer has received the documentation described in paragraph (l)(3) of this sec-tion.

(3) If use of a mitigation bank or in- lieu fee program is approved by the dis-trict engineer to provide part or all of the required compensatory mitigation for a DA permit, the permittee retains responsibility for providing the com-pensatory mitigation until the appro-priate number and resource type of credits have been secured from a spon-sor and the district engineer has re-ceived documentation that confirms that the sponsor has accepted the re-sponsibility for providing the required compensatory mitigation. This docu-mentation may consist of a letter or form signed by the sponsor, with the permit number and a statement indi-cating the number and resource type of credits that have been secured from the sponsor. Copies of this documentation will be retained in the administrative records for both the permit and the in-strument. If the sponsor fails to pro-vide the required compensatory miti-gation, the district engineer may pur-sue measures against the sponsor to ensure compliance.

(m) Timing. Implementation of the compensatory mitigation project shall be, to the maximum extent prac-ticable, in advance of or concurrent with the activity causing the author-ized impacts. The district engineer shall require, to the extent appropriate and practicable, additional compen-satory mitigation to offset temporal losses of aquatic functions that will re-sult from the permitted activity.

(n) Financial assurances. (1) The dis-trict engineer shall require sufficient

financial assurances to ensure a high level of confidence that the compen-satory mitigation project will be suc-cessfully completed, in accordance with applicable performance standards. In cases where an alternate mechanism is available to ensure a high level of confidence that the compensatory mitigation will be provided and main-tained (e.g., a formal, documented commitment from a government agen-cy or public authority) the district en-gineer may determine that financial assurances are not necessary for that compensatory mitigation project.

(2) The amount of the required finan-cial assurances must be determined by the district engineer, in consultation with the project sponsor, and must be based on the size and complexity of the compensatory mitigation project, the degree of completion of the project at the time of project approval, the likeli-hood of success, the past performance of the project sponsor, and any other factors the district engineer deems ap-propriate. Financial assurances may be in the form of performance bonds, es-crow accounts, casualty insurance, let-ters of credit, legislative appropria-tions for government sponsored projects, or other appropriate instru-ments, subject to the approval of the district engineer. The rationale for de-termining the amount of the required financial assurances must be docu-mented in the administrative record for either the DA permit or the instru-ment. In determining the assurance amount, the district engineer shall consider the cost of providing replace-ment mitigation, including costs for land acquisition, planning and engi-neering, legal fees, mobilization, con-struction, and monitoring.

(3) If financial assurances are re-quired, the DA permit must include a special condition requiring the finan-cial assurances to be in place prior to commencing the permitted activity.

(4) Financial assurances shall be phased out once the compensatory mitigation project has been determined by the district engineer to be success-ful in accordance with its performance


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33 CFR Ch. II (7–1–12 Edition) § 332.4

standards. The DA permit or instru-ment must clearly specify the condi-tions under which the financial assur-ances are to be released to the per-mittee, sponsor, and/or other financial assurance provider, including, as ap-propriate, linkage to achievement of performance standards, adaptive man-agement, or compliance with special conditions.

(5) A financial assurance must be in a form that ensures that the district en-gineer will receive notification at least 120 days in advance of any termination or revocation. For third-party assur-ance providers, this may take the form of a contractual requirement for the assurance provider to notify the dis-trict engineer at least 120 days before the assurance is revoked or termi-nated.

(6) Financial assurances shall be pay-able at the direction of the district en-gineer to his designee or to a standby trust agreement. When a standby trust is used (e.g., with performance bonds or letters of credit) all amounts paid by the financial assurance provider shall be deposited directly into the standby trust fund for distribution by the trust-ee in accordance with the district engi-neer’s instructions.

(o) Compliance with applicable law. The compensatory mitigation project must comply with all applicable fed-eral, state, and local laws. The DA per-mit, mitigation banking instrument, or in-lieu fee program instrument must not require participation by the Corps or any other federal agency in project management, including receipt or man-agement of financial assurances or long-term financing mechanisms, ex-cept as determined by the Corps or other agency to be consistent with its statutory authority, mission, and pri-orities.

§ 332.4 Planning and documentation. (a) Pre-application consultations. Po-

tential applicants for standard permits are encouraged to participate in pre- application meetings with the Corps and appropriate agencies to discuss po-tential mitigation requirements and information needs.

(b) Public review and comment. (1) For an activity that requires a standard DA permit pursuant to section 404 of the

Clean Water Act, the public notice for the proposed activity must contain a statement explaining how impacts as-sociated with the proposed activity are to be avoided, minimized, and com-pensated for. This explanation shall ad-dress, to the extent that such informa-tion is provided in the mitigation statement required by § 325.1(d)(7) of this chapter, the proposed avoidance and minimization and the amount, type, and location of any proposed compensatory mitigation, including any out-of-kind compensation, or indi-cate an intention to use an approved mitigation bank or in-lieu fee program. The level of detail provided in the pub-lic notice must be commensurate with the scope and scale of the impacts. The notice shall not include information that the district engineer and the per-mittee believe should be kept confiden-tial for business purposes, such as the exact location of a proposed mitigation site that has not yet been secured. The permittee must clearly identify any in-formation being claimed as confiden-tial in the mitigation statement when submitted. In such cases, the notice must still provide enough information to enable the public to provide mean-ingful comment on the proposed miti-gation.

(2) For individual permits, district engineers must consider any timely comments and recommendations from other federal agencies; tribal, state, or local governments; and the public.

(3) For activities authorized by let-ters of permission or general permits, the review and approval process for compensatory mitigation proposals and plans must be conducted in accordance with the terms and conditions of those permits and applicable regulations in-cluding the applicable provisions of this part.

(c) Mitigation plan—(1) Preparation and approval. (i) For individual per-mits, the permittee must prepare a draft mitigation plan and submit it to the district engineer for review. After addressing any comments provided by the district engineer, the permittee must prepare a final mitigation plan, which must be approved by the district engineer prior to issuing the individual permit. The approved final mitigation


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plan must be incorporated into the in-dividual permit by reference. The final mitigation plan must include the items described in paragraphs (c)(2) through (c)(14) of this section, but the level of detail of the mitigation plan should be commensurate with the scale and scope of the impacts. As an alternative, the district engineer may determine that it would be more appropriate to address any of the items described in para-graphs (c)(2) through (c)(14) of this sec-tion as permit conditions, instead of components of a compensatory mitiga-tion plan. For permittees who intend to fulfill their compensatory mitiga-tion obligations by securing credits from approved mitigation banks or in- lieu fee programs, their mitigation plans need include only the items de-scribed in paragraphs (c)(5) and (c)(6) of this section, and the name of the spe-cific mitigation bank or in-lieu fee pro-gram to be used.

(ii) For general permits, if compen-satory mitigation is required, the dis-trict engineer may approve a concep-tual or detailed compensatory mitiga-tion plan to meet required time frames for general permit verifications, but a final mitigation plan incorporating the elements in paragraphs (c)(2) through (c)(14) of this section, at a level of de-tail commensurate with the scale and scope of the impacts, must be approved by the district engineer before the per-mittee commences work in waters of the United States. As an alternative, the district engineer may determine that it would be more appropriate to address any of the items described in paragraphs (c)(2) through (c)(14) of this section as permit conditions, instead of components of a compensatory mitiga-tion plan. For permittees who intend to fulfill their compensatory mitiga-tion obligations by securing credits from approved mitigation banks or in- lieu fee programs, their mitigation plans need include only the items de-scribed in paragraphs (c)(5) and (c)(6) of this section, and either the name of the specific mitigation bank or in-lieu fee program to be used or a statement in-dicating that a mitigation bank or in- lieu fee program will be used (contin-gent upon approval by the district en-gineer).

(iii) Mitigation banks and in-lieu fee programs must prepare a mitigation plan including the items in paragraphs (c)(2) through (c)(14) of this section for each separate compensatory mitiga-tion project site. For mitigation banks and in-lieu fee programs, the prepara-tion and approval process for mitiga-tion plans is described in § 332.8.

(2) Objectives. A description of the re-source type(s) and amount(s) that will be provided, the method of compensa-tion (i.e., restoration, establishment, enhancement, and/or preservation), and the manner in which the resource func-tions of the compensatory mitigation project will address the needs of the watershed, ecoregion, physiographic province, or other geographic area of interest.

(3) Site selection. A description of the factors considered during the site se-lection process. This should include consideration of watershed needs, on- site alternatives where applicable, and the practicability of accomplishing ecologically self-sustaining aquatic re-source restoration, establishment, en-hancement, and/or preservation at the compensatory mitigation project site. (See § 332.3(d).)

(4) Site protection instrument. A de-scription of the legal arrangements and instrument, including site ownership, that will be used to ensure the long- term protection of the compensatory mitigation project site (see § 332.7(a)).

(5) Baseline information. A description of the ecological characteristics of the proposed compensatory mitigation project site and, in the case of an appli-cation for a DA permit, the impact site. This may include descriptions of historic and existing plant commu-nities, historic and existing hydrology, soil conditions, a map showing the lo-cations of the impact and mitigation site(s) or the geographic coordinates for those site(s), and other site charac-teristics appropriate to the type of re-source proposed as compensation. The baseline information should also in-clude a delineation of waters of the United States on the proposed compen-satory mitigation project site. A pro-spective permittee planning to secure credits from an approved mitigation bank or in-lieu fee program only needs to provide baseline information about


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33 CFR Ch. II (7–1–12 Edition) § 332.5

the impact site, not the mitigation bank or in-lieu fee project site.

(6) Determination of credits. A descrip-tion of the number of credits to be pro-vided, including a brief explanation of the rationale for this determination. (See § 332.3(f).)

(i) For permittee-responsible mitiga-tion, this should include an expla-nation of how the compensatory miti-gation project will provide the required compensation for unavoidable impacts to aquatic resources resulting from the permitted activity.

(ii) For permittees intending to se-cure credits from an approved mitiga-tion bank or in-lieu fee program, it should include the number and re-source type of credits to be secured and how these were determined.

(7) Mitigation work plan. Detailed written specifications and work de-scriptions for the compensatory miti-gation project, including, but not lim-ited to, the geographic boundaries of the project; construction methods, tim-ing, and sequence; source(s) of water, including connections to existing waters and uplands; methods for estab-lishing the desired plant community; plans to control invasive plant species; the proposed grading plan, including elevations and slopes of the substrate; soil management; and erosion control measures. For stream compensatory mitigation projects, the mitigation work plan may also include other rel-evant information, such as planform geometry, channel form (e.g., typical channel cross-sections), watershed size, design discharge, and riparian area plantings.

(8) Maintenance plan. A description and schedule of maintenance require-ments to ensure the continued viabil-ity of the resource once initial con-struction is completed.

(9) Performance standards. Eco-logically-based standards that will be used to determine whether the compen-satory mitigation project is achieving its objectives. (See § 332.5.)

(10) Monitoring requirements. A de-scription of parameters to be mon-itored in order to determine if the com-pensatory mitigation project is on track to meet performance standards and if adaptive management is needed. A schedule for monitoring and report-

ing on monitoring results to the dis-trict engineer must be included. (See § 332.6.)

(11) Long-term management plan. A de-scription of how the compensatory mitigation project will be managed after performance standards have been achieved to ensure the long-term sus-tainability of the resource, including long-term financing mechanisms and the party responsible for long-term management. (See § 332.7(d).)

(12) Adaptive management plan. A management strategy to address un-foreseen changes in site conditions or other components of the compensatory mitigation project, including the party or parties responsible for implementing adaptive management measures. The adaptive management plan will guide decisions for revising compensatory mitigation plans and implementing measures to address both foreseeable and unforeseen circumstances that ad-versely affect compensatory mitigation success. (See § 332.7(c).)

(13) Financial assurances. A descrip-tion of financial assurances that will be provided and how they are sufficient to ensure a high level of confidence that the compensatory mitigation project will be successfully completed, in accordance with its performance standards (see § 332.3(n)).

(14) Other information. The district engineer may require additional infor-mation as necessary to determine the appropriateness, feasibility, and prac-ticability of the compensatory mitiga-tion project.

§ 332.5 Ecological performance stand-ards.

(a) The approved mitigation plan must contain performance standards that will be used to assess whether the project is achieving its objectives. Per-formance standards should relate to the objectives of the compensatory mitigation project, so that the project can be objectively evaluated to deter-mine if it is developing into the desired resource type, providing the expected functions, and attaining any other ap-plicable metrics (e.g., acres).

(b) Performance standards must be based on attributes that are objective and verifiable. Ecological performance standards must be based on the best


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available science that can be measured or assessed in a practicable manner. Performance standards may be based on variables or measures of functional capacity described in functional assess-ment methodologies, measurements of hydrology or other aquatic resource characteristics, and/or comparisons to reference aquatic resources of similar type and landscape position. The use of reference aquatic resources to estab-lish performance standards will help ensure that those performance stand-ards are reasonably achievable, by re-flecting the range of variability exhib-ited by the regional class of aquatic re-sources as a result of natural processes and anthropogenic disturbances. Per-formance standards based on measure-ments of hydrology should take into consideration the hydrologic varia-bility exhibited by reference aquatic resources, especially wetlands. Where practicable, performance standards should take into account the expected stages of the aquatic resource develop-ment process, in order to allow early identification of potential problems and appropriate adaptive management.

§ 332.6 Monitoring.

(a) General. (1) Monitoring the com-pensatory mitigation project site is necessary to determine if the project is meeting its performance standards, and to determine if measures are necessary to ensure that the compensatory miti-gation project is accomplishing its ob-jectives. The submission of monitoring reports to assess the development and condition of the compensatory mitiga-tion project is required, but the con-tent and level of detail for those moni-toring reports must be commensurate with the scale and scope of the compen-satory mitigation project, as well as the compensatory mitigation project type. The mitigation plan must address the monitoring requirements for the compensatory mitigation project, in-cluding the parameters to be mon-itored, the length of the monitoring pe-riod, the party responsible for con-ducting the monitoring, the frequency for submitting monitoring reports to the district engineer, and the party re-sponsible for submitting those moni-toring reports to the district engineer.

(2) The district engineer may conduct site inspections on a regular basis (e.g., annually) during the monitoring period to evaluate mitigation site perform-ance.

(b) Monitoring period. The mitigation plan must provide for a monitoring pe-riod that is sufficient to demonstrate that the compensatory mitigation project has met performance standards, but not less than five years. A longer monitoring period must be required for aquatic resources with slow develop-ment rates (e.g., forested wetlands, bogs). Following project implementa-tion, the district engineer may reduce or waive the remaining monitoring re-quirements upon a determination that the compensatory mitigation project has achieved its performance stand-ards. Conversely the district engineer may extend the original monitoring pe-riod upon a determination that per-formance standards have not been met or the compensatory mitigation project is not on track to meet them. The district engineer may also revise monitoring requirements when remedi-ation and/or adaptive management is required.

(c) Monitoring reports. (1) The district engineer must determine the informa-tion to be included in monitoring re-ports. This information must be suffi-cient for the district engineer to deter-mine how the compensatory mitigation project is progressing towards meeting its performance standards, and may in-clude plans (such as as-built plans), maps, and photographs to illustrate site conditions. Monitoring reports may also include the results of func-tional, condition, or other assessments used to provide quantitative or quali-tative measures of the functions pro-vided by the compensatory mitigation project site.

(2) The permittee or sponsor is re-sponsible for submitting monitoring re-ports in accordance with the special conditions of the DA permit or the terms of the instrument. Failure to submit monitoring reports in a timely manner may result in compliance ac-tion by the district engineer.

(3) Monitoring reports must be pro-vided by the district engineer to inter-ested federal, tribal, state, and local


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33 CFR Ch. II (7–1–12 Edition) § 332.7

resource agencies, and the public, upon request.

§ 332.7 Management. (a) Site protection. (1) The aquatic

habitats, riparian areas, buffers, and uplands that comprise the overall com-pensatory mitigation project must be provided long-term protection through real estate instruments or other avail-able mechanisms, as appropriate. Long- term protection may be provided through real estate instruments such as conservation easements held by en-tities such as federal, tribal, state, or local resource agencies, non-profit con-servation organizations, or private land managers; the transfer of title to such entities; or by restrictive cov-enants. For government property, long- term protection may be provided through federal facility management plans or integrated natural resources management plans. When approving a method for long-term protection of non-government property other than transfer of title, the district engineer shall consider relevant legal con-straints on the use of conservation easements and/or restrictive covenants in determining whether such mecha-nisms provide sufficient site protec-tion. To provide sufficient site protec-tion, a conservation easement or re-strictive covenant should, where prac-ticable, establish in an appropriate third party (e.g., governmental or non- profit resource management agency) the right to enforce site protections and provide the third party the re-sources necessary to monitor and en-force these site protections.

(2) The real estate instrument, man-agement plan, or other mechanism pro-viding long-term protection of the compensatory mitigation site must, to the extent appropriate and practicable, prohibit incompatible uses (e.g., clear cutting or mineral extraction) that might otherwise jeopardize the objec-tives of the compensatory mitigation project. Where appropriate, multiple instruments recognizing compatible uses (e.g., fishing or grazing rights) may be used.

(3) The real estate instrument, man-agement plan, or other long-term pro-tection mechanism must contain a pro-vision requiring 60-day advance notifi-

cation to the district engineer before any action is taken to void or modify the instrument, management plan, or long-term protection mechanism, in-cluding transfer of title to, or estab-lishment of any other legal claims over, the compensatory mitigation site.

(4) For compensatory mitigation projects on public lands, where federal facility management plans or inte-grated natural resources management plans are used to provide long-term protection, and changes in statute, reg-ulation, or agency needs or mission re-sults in an incompatible use on public lands originally set aside for compen-satory mitigation, the public agency authorizing the incompatible use is re-sponsible for providing alternative compensatory mitigation that is ac-ceptable to the district engineer for any loss in functions resulting from the incompatible use.

(5) A real estate instrument, manage-ment plan, or other long-term protec-tion mechanism used for site protec-tion of permittee-responsible mitiga-tion must be approved by the district engineer in advance of, or concurrent with, the activity causing the author-ized impacts.

(b) Sustainability. Compensatory miti-gation projects shall be designed, to the maximum extent practicable, to be self-sustaining once performance standards have been achieved. This in-cludes minimization of active engineer-ing features (e.g., pumps) and appro-priate siting to ensure that natural hy-drology and landscape context will sup-port long-term sustainability. Where active long-term management and maintenance are necessary to ensure long-term sustainability (e.g., pre-scribed burning, invasive species con-trol, maintenance of water control structures, easement enforcement), the responsible party must provide for such management and maintenance. This in-cludes the provision of long-term fi-nancing mechanisms where necessary. Where needed, the acquisition and pro-tection of water rights must be secured and documented in the permit condi-tions or instrument.

(c) Adaptive management. (1) If the compensatory mitigation project can-not be constructed in accordance with


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the approved mitigation plans, the per-mittee or sponsor must notify the dis-trict engineer. A significant modifica-tion of the compensatory mitigation project requires approval from the dis-trict engineer.

(2) If monitoring or other informa-tion indicates that the compensatory mitigation project is not progressing towards meeting its performance standards as anticipated, the respon-sible party must notify the district en-gineer as soon as possible. The district engineer will evaluate and pursue measures to address deficiencies in the compensatory mitigation project. The district engineer will consider whether the compensatory mitigation project is providing ecological benefits com-parable to the original objectives of the compensatory mitigation project.

(3) The district engineer, in consulta-tion with the responsible party (and other federal, tribal, state, and local agencies, as appropriate), will deter-mine the appropriate measures. The measures may include site modifica-tions, design changes, revisions to maintenance requirements, and revised monitoring requirements. The meas-ures must be designed to ensure that the modified compensatory mitigation project provides aquatic resource func-tions comparable to those described in the mitigation plan objectives.

(4) Performance standards may be re-vised in accordance with adaptive man-agement to account for measures taken to address deficiencies in the compen-satory mitigation project. Performance standards may also be revised to re-flect changes in management strate-gies and objectives if the new standards provide for ecological benefits that are comparable or superior to the approved compensatory mitigation project. No other revisions to performance stand-ards will be allowed except in the case of natural disasters.

(d) Long-term management. (1) The permit conditions or instrument must identify the party responsible for own-ership and all long-term management of the compensatory mitigation project. The permit conditions or in-strument may contain provisions al-lowing the permittee or sponsor to transfer the long-term management re-sponsibilities of the compensatory

mitigation project site to a land stew-ardship entity, such as a public agency, non-governmental organization, or pri-vate land manager, after review and approval by the district engineer. The land stewardship entity need not be identified in the original permit or in-strument, as long as the future trans-fer of long-term management responsi-bility is approved by the district engi-neer.

(2) A long-term management plan should include a description of long- term management needs, annual cost estimates for these needs, and identify the funding mechanism that will be used to meet those needs.

(3) Any provisions necessary for long- term financing must be addressed in the original permit or instrument. The district engineer may require provi-sions to address inflationary adjust-ments and other contingencies, as ap-propriate. Appropriate long-term fi-nancing mechanisms include non-wast-ing endowments, trusts, contractual arrangements with future responsible parties, and other appropriate financial instruments. In cases where the long- term management entity is a public authority or government agency, that entity must provide a plan for the long-term financing of the site.

(4) For permittee-responsible mitiga-tion, any long-term financing mecha-nisms must be approved in advance of the activity causing the authorized im-pacts.

§ 332.8 Mitigation banks and in-lieu fee programs.

(a) General considerations. (1) All miti-gation banks and in-lieu fee programs must have an approved instrument signed by the sponsor and the district engineer prior to being used to provide compensatory mitigation for DA per-mits.

(2) To the maximum extent prac-ticable, mitigation banks and in-lieu fee project sites must be planned and designed to be self-sustaining over time, but some active management and maintenance may be required to ensure their long-term viability and sustain-ability. Examples of acceptable man-agement activities include maintaining fire-dependent habitat communities in


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the absence of natural fire and control-ling invasive exotic plant species.

(3) All mitigation banks and in-lieu fee programs must comply with the standards in this part, if they are to be used to provide compensatory mitiga-tion for activities authorized by DA permits, regardless of whether they are sited on public or private lands and whether the sponsor is a governmental or private entity.

(b) Interagency Review Team. (1) The district engineer will establish an Interagency Review Team (IRT) to re-view documentation for the establish-ment and management of mitigation banks and in-lieu fee programs. The district engineer or his designated rep-resentative serves as Chair of the IRT. In cases where a mitigation bank or in- lieu fee program is proposed to satisfy the requirements of another federal, tribal, state, or local program, in addi-tion to compensatory mitigation re-quirements of DA permits, it may be appropriate for the administering agency to serve as co-Chair of the IRT.

(2) In addition to the Corps, rep-resentatives from the U.S. Environ-mental Protection Agency, U.S. Fish and Wildlife Service, NOAA Fisheries, the Natural Resources Conservation Service, and other federal agencies, as appropriate, may participate in the IRT. The IRT may also include rep-resentatives from tribal, state, and local regulatory and resource agencies, where such agencies have authorities and/or mandates directly affecting, or affected by, the establishment, oper-ation, or use of the mitigation bank or in-lieu fee program. The district engi-neer will seek to include all public agencies with a substantive interest in the establishment of the mitigation bank or in-lieu fee program on the IRT, but retains final authority over its composition.

(3) The primary role of the IRT is to facilitate the establishment of mitiga-tion banks or in-lieu fee programs through the development of mitigation banking or in-lieu fee program instru-ments. The IRT will review the pro-spectus, instrument, and other appro-priate documents and provide com-ments to the district engineer. The dis-trict engineer and the IRT should use a watershed approach to the extent prac-

ticable in reviewing proposed mitiga-tion banks and in-lieu fee programs. Members of the IRT may also sign the instrument, if they so choose. By sign-ing the instrument, the IRT members indicate their agreement with the terms of the instrument. As an alter-native, a member of the IRT may sub-mit a letter expressing concurrence with the instrument. The IRT will also advise the district engineer in assess-ing monitoring reports, recommending remedial or adaptive management measures, approving credit releases, and approving modifications to an in-strument. In order to ensure timely processing of instruments and other documentation, comments from IRT members must be received by the dis-trict engineer within the time limits specified in this section. Comments re-ceived after these deadlines will only be considered at the discretion of the district engineer to the extent that doing so does not jeopardize the dead-lines for district engineer action.

(4) The district engineer will give full consideration to any timely comments and advice of the IRT. The district en-gineer alone retains final authority for approval of the instrument in cases where the mitigation bank or in-lieu fee program is used to satisfy compen-satory mitigation requirements of DA permits.

(5) MOAs with other agencies. The dis-trict engineer and members of the IRT may enter into a memorandum of agreement (MOA) with any other fed-eral, state or local government agency to perform all or some of the IRT re-view functions described in this sec-tion. Such MOAs must include provi-sions for appropriate federal oversight of the review process. The district engi-neer retains sole authority for final ap-proval of instruments and other docu-mentation required under this section.

(c) Compensation planning framework for in-lieu fee programs. (1) The approved instrument for an in-lieu fee program must include a compensation planning framework that will be used to select, secure, and implement aquatic re-source restoration, establishment, en-hancement, and/or preservation activi-ties. The compensation planning framework must support a watershed approach to compensatory mitigation.


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All specific projects used to provide compensation for DA permits must be consistent with the approved com-pensation planning framework. Modi-fications to the framework must be ap-proved as a significant modification to the instrument by the district engi-neer, after consultation with the IRT.

(2) The compensation planning framework must contain the following elements:

(i) The geographic service area(s), in-cluding a watershed-based rationale for the delineation of each service area;

(ii) A description of the threats to aquatic resources in the service area(s), including how the in-lieu fee program will help offset impacts resulting from those threats;

(iii) An analysis of historic aquatic resource loss in the service area(s);

(iv) An analysis of current aquatic resource conditions in the service area(s), supported by an appropriate level of field documentation;

(v) A statement of aquatic resource goals and objectives for each service area, including a description of the general amounts, types and locations of aquatic resources the program will seek to provide;

(vi) A prioritization strategy for se-lecting and implementing compen-satory mitigation activities;

(vii) An explanation of how any pres-ervation objectives identified in para-graph (c)(2)(v) of this section and ad-dressed in the prioritization strategy in paragraph (c)(2)(vi) satisfy the cri-teria for use of preservation in § 332.3(h);

(viii) A description of any public and private stakeholder involvement in plan development and implementation, including, where appropriate, coordina-tion with federal, state, tribal and local aquatic resource management and regulatory authorities;

(ix) A description of the long-term protection and management strategies for activities conducted by the in-lieu fee program sponsor;

(x) A strategy for periodic evaluation and reporting on the progress of the program in achieving the goals and ob-jectives in paragraph (c)(2)(v) of this section, including a process for revising the planning framework as necessary; and

(xi) Any other information deemed necessary for effective compensation planning by the district engineer.

(3) The level of detail necessary for the compensation planning framework is at the discretion of the district engi-neer, and will take into account the characteristics of the service area(s) and the scope of the program. As part of the in-lieu fee program instrument, the compensation planning framework will be reviewed by the IRT, and will be a major factor in the district engi-neer’s decision on whether to approve the instrument.

(d) Review process. (1) The sponsor is responsible for preparing all docu-mentation associated with establish-ment of the mitigation bank or in-lieu fee program, including the prospectus, instrument, and other appropriate doc-uments, such as mitigation plans for a mitigation bank. The prospectus pro-vides an overview of the proposed miti-gation bank or in-lieu fee program and serves as the basis for public and ini-tial IRT comment. For a mitigation bank, the mitigation plan, as described in § 332.4(c), provides detailed plans and specifications for the mitigation bank site. For in-lieu fee programs, mitiga-tion plans will be prepared as in-lieu fee project sites are identified after the instrument has been approved and the in-lieu fee program becomes oper-ational. The instrument provides the authorization for the mitigation bank or in-lieu fee program to provide cred-its to be used as compensatory mitiga-tion for DA permits.

(2) Prospectus. The prospectus must provide a summary of the information regarding the proposed mitigation bank or in-lieu fee program, at a suffi-cient level of detail to support in-formed public and IRT comment. The review process begins when the sponsor submits a complete prospectus to the district engineer. For modifications of approved instruments, submittal of a new prospectus is not required; instead, the sponsor must submit a written re-quest for an instrument modification accompanied by appropriate docu-mentation. The district engineer must notify the sponsor within 30 days whether or not a submitted prospectus is complete. A complete prospectus in-cludes the following information:


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(i) The objectives of the proposed mitigation bank or in-lieu fee program.

(ii) How the mitigation bank or in- lieu fee program will be established and operated.

(iii) The proposed service area. (iv) The general need for and tech-

nical feasibility of the proposed miti-gation bank or in-lieu fee program.

(v) The proposed ownership arrange-ments and long-term management strategy for the mitigation bank or in- lieu fee project sites.

(vi) The qualifications of the sponsor to successfully complete the type(s) of mitigation project(s) proposed, includ-ing information describing any past such activities by the sponsor.

(vii) For a proposed mitigation bank, the prospectus must also address:

(A) The ecological suitability of the site to achieve the objectives of the proposed mitigation bank, including the physical, chemical, and biological characteristics of the bank site and how that site will support the planned types of aquatic resources and func-tions; and

(B) Assurance of sufficient water rights to support the long-term sus-tainability of the mitigation bank.

(viii) For a proposed in-lieu fee pro-gram, the prospectus must also in-clude:

(A) The compensation planning framework (see paragraph (c) of this section); and

(B) A description of the in-lieu fee program account required by para-graph (i) of this section.

(3) Preliminary review of prospectus. Prior to submitting a prospectus, the sponsor may elect to submit a draft prospectus to the district engineer for comment and consultation. The dis-trict engineer will provide copies of the draft prospectus to the IRT and will provide comments back to the sponsor within 30 days. Any comments from IRT members will also be forwarded to the sponsor. This preliminary review is optional but is strongly recommended. It is intended to identify potential issues early so that the sponsor may attempt to address those issues prior to the start of the formal review proc-ess.

(4) Public review and comment. Within 30 days of receipt of a complete pro-

spectus or an instrument modification request that will be processed in ac-cordance with paragraph (g)(1) of this section, the district engineer will pro-vide public notice of the proposed miti-gation bank or in-lieu fee program, in accordance with the public notice pro-cedures at 33 CFR 325.3. The public no-tice must, at a minimum, include a summary of the prospectus and indi-cate that the full prospectus is avail-able to the public for review upon re-quest. For modifications of approved instruments, the public notice must in-stead summarize, and make available to the public upon request, whatever documentation is appropriate for the modification (e.g., a new or revised mitigation plan). The comment period for public notice will be 30 days, unless the district engineer determines that a longer comment period is appropriate. The district engineer will notify the sponsor if the comment period is ex-tended beyond 30 days, including an ex-planation of why the longer comment period is necessary. Copies of all com-ments received in response to the pub-lic notice must be distributed to the other IRT members and to the sponsor within 15 days of the close of the public comment period. The district engineer and IRT members may also provide comments to the sponsor at this time, and copies of any such comments will also be distributed to all IRT members. If the construction of a mitigation bank or an in-lieu fee program project requires a DA permit, the public notice requirement may be satisfied through the public notice provisions of the per-mit processing procedures, provided all of the relevant information is provided.

(5) Initial evaluation. (i) After the end of the comment period, the district en-gineer will review the comments re-ceived in response to the public notice, and make a written initial evaluation as to the potential of the proposed mitigation bank or in-lieu fee program to provide compensatory mitigation for activities authorized by DA per-mits. This initial evaluation letter must be provided to the sponsor within 30 days of the end of the public notice comment period.

(ii) If the district engineer deter-mines that the proposed mitigation


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bank or in-lieu fee program has poten-tial for providing appropriate compen-satory mitigation for activities author-ized by DA permits, the initial evalua-tion letter will inform the sponsor that he/she may proceed with preparation of the draft instrument (see paragraph (d)(6) of this section).

(iii) If the district engineer deter-mines that the proposed mitigation bank or in-lieu fee program does not have potential for providing appro-priate compensatory mitigation for DA permits, the initial evaluation letter must discuss the reasons for that de-termination. The sponsor may revise the prospectus to address the district engineer’s concerns, and submit the re-vised prospectus to the district engi-neer. If the sponsor submits a revised prospectus, a revised public notice will be issued in accordance with paragraph (d)(4) of this section.

(iv) This initial evaluation procedure does not apply to proposed modifica-tions of approved instruments.

(6) Draft instrument. (i) After consid-ering comments from the district engi-neer, the IRT, and the public, if the sponsor chooses to proceed with estab-lishment of the mitigation bank or in- lieu fee program, he must prepare a draft instrument and submit it to the district engineer. In the case of an in-strument modification, the sponsor must prepare a draft amendment (e.g., a specific instrument provision, a new or modified mitigation plan), and sub-mit it to the district engineer. The dis-trict engineer must notify the sponsor within 30 days of receipt, whether the draft instrument or amendment is complete. If the draft instrument or amendment is incomplete, the district engineer will request from the sponsor the information necessary to make the draft instrument or amendment com-plete. Once any additional information is submitted, the district engineer must notify the sponsor as soon as he determines that the draft instrument or amendment is complete. The draft instrument must be based on the pro-spectus and must describe in detail the physical and legal characteristics of the mitigation bank or in-lieu fee pro-gram and how it will be established and operated.

(ii) For mitigation banks and in-lieu fee programs, the draft instrument must include the following informa-tion:

(A) A description of the proposed geo-graphic service area of the mitigation bank or in-lieu fee program. The serv-ice area is the watershed, ecoregion, physiographic province, and/or other geographic area within which the miti-gation bank or in-lieu fee program is authorized to provide compensatory mitigation required by DA permits. The service area must be appropriately sized to ensure that the aquatic re-sources provided will effectively com-pensate for adverse environmental im-pacts across the entire service area. For example, in urban areas, a U.S. Ge-ological Survey 8-digit hydrologic unit code (HUC) watershed or a smaller wa-tershed may be an appropriate service area. In rural areas, several contiguous 8-digit HUCs or a 6-digit HUC water-shed may be an appropriate service area. Delineation of the service area must also consider any locally-devel-oped standards and criteria that may be applicable. The economic viability of the mitigation bank or in-lieu fee program may also be considered in de-termining the size of the service area. The basis for the proposed service area must be documented in the instrument. An in-lieu fee program or umbrella mitigation banking instrument may have multiple service areas governed by its instrument (e.g., each watershed within a state or Corps district may be a separate service area under the in-strument); however, all impacts and compensatory mitigation must be ac-counted for by service area;

(B) Accounting procedures; (C) A provision stating that legal re-

sponsibility for providing the compen-satory mitigation lies with the sponsor once a permittee secures credits from the sponsor;

(D) Default and closure provisions; (E) Reporting protocols; and (F) Any other information deemed

necessary by the district engineer. (iii) For a mitigation bank, a com-

plete draft instrument must include the following additional information:

(A) Mitigation plans that include all applicable items listed in § 332.4(c)(2) through (14); and


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(B) A credit release schedule, which is tied to achievement of specific mile-stones. All credit releases must be ap-proved by the district engineer, in con-sultation with the IRT, based on a de-termination that required milestones have been achieved. The district engi-neer, in consultation with the IRT, may modify the credit release sched-ule, including reducing the number of available credits or suspending credit sales or transfers altogether, where necessary to ensure that all credit sales or transfers remain tied to com-pensatory mitigation projects with a high likelihood of meeting performance standards;

(iv) For an in-lieu fee program, a complete draft instrument must in-clude the following additional informa-tion:

(A) The compensation planning framework (see paragraph (c) of this section);

(B) Specification of the initial alloca-tion of advance credits (see paragraph (n) of this section) and a draft fee schedule for these credits, by service area, including an explanation of the basis for the allocation and draft fee schedule;

(C) A methodology for determining future project-specific credits and fees; and

(D) A description of the in-lieu fee program account required by para-graph (i) of this section.

(7) IRT review. Upon receipt of notifi-cation by the district engineer that the draft instrument or amendment is complete, the sponsor must provide the district engineer with a sufficient num-ber of copies of the draft instrument or amendment to distribute to the IRT members. The district engineer will promptly distribute copies of the draft instrument or amendment to the IRT members for a 30-day comment period. The 30-day comment period begins 5 days after the district engineer distrib-utes the copies of the draft instrument or amendment to the IRT. Following the comment period, the district engi-neer will discuss any comments with the appropriate agencies and with the sponsor. The district engineer will seek to resolve issues using a consensus based approach, to the extent prac-ticable, while still meeting the deci-

sion-making time frames specified in this section. Within 90 days of receipt of the complete draft instrument or amendment by the IRT members, the district engineer must notify the spon-sor of the status of the IRT review. Specifically, the district engineer must indicate to the sponsor if the draft in-strument or amendment is generally acceptable and what changes, if any, are needed. If there are significant un-resolved concerns that may lead to a formal objection from one or more IRT members to the final instrument or amendment, the district engineer will indicate the nature of those concerns.

(8) Final instrument. The sponsor must submit a final instrument to the dis-trict engineer for approval, with sup-porting documentation that explains how the final instrument addresses the comments provided by the IRT. For modifications of approved instruments, the sponsor must submit a final amendment to the district engineer for approval, with supporting documenta-tion that explains how the final amend-ment addresses the comments provided by the IRT. The final instrument or amendment must be provided directly by the sponsor to all members of the IRT. Within 30 days of receipt of the final instrument or amendment, the district engineer will notify the IRT members whether or not he intends to approve the instrument or amendment. If no IRT member objects, by initiating the dispute resolution process in para-graph (e) of this section within 45 days of receipt of the final instrument or amendment, the district engineer will notify the sponsor of his final decision and, if the instrument or amendment is approved, arrange for it to be signed by the appropriate parties. If any IRT member initiates the dispute resolu-tion process, the district engineer will notify the sponsor. Following conclu-sion of the dispute resolution process, the district engineer will notify the sponsor of his final decision, and if the instrument or amendment is approved, arrange for it to be signed by the ap-propriate parties. For mitigation banks, the final instrument must con-tain the information items listed in paragraphs (d)(6)(ii), and (iii) of this section. For in-lieu fee programs, the


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final instrument must contain the in-formation items listed in paragraphs (d)(6)(ii) and (iv) of this section. For the modification of an approved instru-ment, the amendment must contain ap-propriate information, as determined by the district engineer. The final in-strument or amendment must be made available to the public upon request.

(e) Dispute resolution process. (1) With-in 15 days of receipt of the district en-gineer’s notification of intent to ap-prove an instrument or amendment, the Regional Administrator of the U.S. EPA, the Regional Director of the U.S. Fish and Wildlife Service, the Regional Director of the National Marine Fish-eries Service, and/or other senior offi-cials of agencies represented on the IRT may notify the district engineer and other IRT members by letter if they object to the approval of the pro-posed final instrument or amendment. This letter must include an expla-nation of the basis for the objection and, where feasible, offer recommenda-tions for resolving the objections. If the district engineer does not receive any objections within this time period, he may proceed to final action on the instrument or amendment.

(2) The district engineer must re-spond to the objection within 30 days of receipt of the letter. The district engi-neer’s response may indicate an intent to disapprove the instrument or amendment as a result of the objec-tion, an intent to approve the instru-ment or amendment despite the objec-tion, or may provide a modified instru-ment or amendment that attempts to address the objection. The district en-gineer’s response must be provided to all IRT members.

(3) Within 15 days of receipt of the district engineer’s response, if the Re-gional Administrator or Regional Di-rector is not satisfied with the re-sponse he may forward the issue to the Assistant Administrator for Water of the U.S. EPA, the Assistant Secretary for Fish and Wildlife and Parks of the U.S. FWS, or the Undersecretary for Oceans and Atmosphere of NOAA, as appropriate, for review and must notify the district engineer by letter via elec-tronic mail or facsimile machine (with copies to all IRT members) that the issue has been forwarded for Head-

quarters review. This step is available only to the IRT members representing these three federal agencies, however other IRT members who do not agree with the district engineer’s final deci-sion do not have to sign the instrument or amendment or recognize the mitiga-tion bank or in-lieu fee program for purposes of their own programs and au-thorities. If an IRT member other than the one filing the original objection has a new objection based on the dis-trict engineer’s response, he may use the first step in this procedure (para-graph (e)(1) of this section) to provide that objection to the district engineer.

(4) If the issue has not been for-warded to the objecting agency’s Head-quarters, then the district engineer may proceed with final action on the instrument or amendment. If the issue has been forwarded to the objecting agency’s Headquarters, the district en-gineer must hold in abeyance the final action on the instrument or amend-ment, pending Headquarters level re-view described below.

(5) Within 20 days from the date of the letter requesting Headquarters level review, the Assistant Adminis-trator for Water, the Assistant Sec-retary for Fish and Wildlife and Parks, or the Undersecretary for Oceans and Atmosphere must either notify the As-sistant Secretary of the Army (Civil Works) (ASA(CW)) that further review will not be requested, or request that the ASA(CW) review the final instru-ment or amendment.

(6) Within 30 days of receipt of the letter from the objecting agency’s Headquarters request for ASA(CW)’s review of the final instrument, the ASA(CW), through the Director of Civil Works, must review the draft instru-ment or amendment and advise the dis-trict engineer on how to proceed with final action on that instrument or amendment. The ASA(CW) must imme-diately notify the Assistant Adminis-trator for Water, the Assistant Sec-retary for Fish and Wildlife and Parks, and/or the Undersecretary for Oceans and Atmosphere of the final decision.

(7) In cases where the dispute resolu-tion procedure is used, the district en-gineer must notify the sponsor of his final decision within 150 days of receipt of the final instrument or amendment.


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(f) Extension of deadlines. (1) The deadlines in paragraphs (d) and (e) of this section may be extended by the district engineer at his sole discretion in cases where:

(i) Compliance with other applicable laws, such as consultation under sec-tion 7 of the Endangered Species Act or section 106 of the National Historic Preservation Act, is required;

(ii) It is necessary to conduct govern-ment-to-government consultation with Indian tribes;

(iii) Timely submittal of information necessary for the review of the pro-posed mitigation bank or in-lieu fee program or the proposed modification of an approved instrument is not ac-complished by the sponsor; or

(iv) Information that is essential to the district engineer’s decision cannot be reasonably obtained within the spec-ified time frame.

(2) In such cases, the district engi-neer must promptly notify the sponsor in writing of the extension and the rea-son for it. Such extensions shall be for the minimum time necessary to re-solve the issue necessitating the exten-sion.

(g) Modification of instruments—(1) Ap-proval of an amendment to an approved instrument. Modification of an approved instrument, including the addition and approval of umbrella mitigation bank sites or in-lieu fee project sites or ex-pansions of previously approved miti-gation bank or in-lieu fee project sites, must follow the appropriate procedures in paragraph (d) of this section, unless the district engineer determines that the streamlined review process de-scribed in paragraph (g)(2) of this sec-tion is warranted.

(2) Streamlined review process. The streamlined modification review proc-ess may be used for the following modi-fications of instruments: changes re-flecting adaptive management of the mitigation bank or in-lieu fee program, credit releases, changes in credit re-leases and credit release schedules, and changes that the district engineer de-termines are not significant. If the dis-trict engineer determines that the streamlined review process is war-ranted, he must notify the IRT mem-bers and the sponsor of this determina-tion and provide them with copies of

the proposed modification. IRT mem-bers and the sponsor have 30 days to notify the district engineer if they have concerns with the proposed modi-fication. If IRT members or the sponsor notify the district engineer of such concerns, the district engineer shall at-tempt to resolve those concerns. With-in 60 days of providing the proposed modification to the IRT, the district engineer must notify the IRT members of his intent to approve or disapprove the proposed modification. If no IRT member objects, by initiating the dis-pute resolution process in paragraph (e) of this section, within 15 days of re-ceipt of this notification, the district engineer will notify the sponsor of his final decision and, if the modification is approved, arrange for it to be signed by the appropriate parties. If any IRT member initiates the dispute resolu-tion process, the district engineer will so notify the sponsor. Following con-clusion of the dispute resolution proc-ess, the district engineer will notify the sponsor of his final decision, and if the modification is approved, arrange for it to be signed by the appropriate parties.

(h) Umbrella mitigation banking instru-ments. A single mitigation banking in-strument may provide for future au-thorization of additional mitigation bank sites. As additional sites are se-lected, they must be included in the mitigation banking instrument as modifications, using the procedures in paragraph (g)(1) of this section. Credit withdrawal from the additional bank sites shall be consistent with para-graph (m) of this section.

(i) In-lieu fee program account. (1) The in-lieu fee program sponsor must estab-lish a program account after the in-strument is approved by the district engineer, prior to accepting any fees from permittees. If the sponsor accepts funds from entities other than permit-tees, those funds must be kept in sepa-rate accounts. The program account must be established at a financial in-stitution that is a member of the Fed-eral Deposit Insurance Corporation. All interests and earnings accruing to the program account must remain in that account for use by the in-lieu fee pro-gram for the purposes of providing


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compensatory mitigation for DA per-mits. The program account may only be used for the selection, design, acqui-sition, implementation, and manage-ment of in-lieu fee compensatory miti-gation projects, except for a small per-centage (as determined by the district engineer in consultation with the IRT and specified in the instrument) that can be used for administrative costs.

(2) The sponsor must submit proposed in-lieu fee projects to the district engi-neer for funding approval. Disburse-ments from the program account may only be made upon receipt of written authorization from the district engi-neer, after the district engineer has consulted with the IRT. The terms of the program account must specify that the district engineer has the authority to direct those funds to alternative compensatory mitigation projects in cases where the sponsor does not pro-vide compensatory mitigation in ac-cordance with the time frame specified in paragraph (n)(4) of this section.

(3) The sponsor must provide annual reports to the district engineer and the IRT. The annual reports must include the following information:

(i) All income received, disburse-ments, and interest earned by the pro-gram account;

(ii) A list of all permits for which in- lieu fee program funds were accepted. This list shall include: The Corps per-mit number (or the state permit num-ber if there is no corresponding Corps permit number, in cases of state pro-grammatic general permits or other re-gional general permits), the service area in which the authorized impacts are located, the amount of authorized impacts, the amount of required com-pensatory mitigation, the amount paid to the in-lieu fee program, and the date the funds were received from the per-mittee;

(iii) A description of in-lieu fee pro-gram expenditures from the account, such as the costs of land acquisition, planning, construction, monitoring, maintenance, contingencies, adaptive management, and administration;

(iv) The balance of advance credits and released credits at the end of the report period for each service area; and

(v) Any other information required by the district engineer.

(4) The district engineer may audit the records pertaining to the program account. All books, accounts, reports, files, and other records relating to the in-lieu fee program account shall be available at reasonable times for in-spection and audit by the district engi-neer.

(j) In-lieu fee project approval. (1) As in-lieu fee project sites are identified and secured, the sponsor must submit mitigation plans to the district engi-neer that include all applicable items listed in § 332.4(c)(2) through (14). The mitigation plan must also include a credit release schedule consistent with paragraph (o)(8) of this section that is tied to achievement of specific per-formance standards. The review and approval of in-lieu fee projects will be conducted in accordance with the pro-cedures in paragraph (g)(1) of this sec-tion, as modifications of the in-lieu fee program instrument. This includes compensatory mitigation projects con-ducted by another party on behalf of the sponsor through requests for pro-posals and awarding of contracts.

(2) If a DA permit is required for an in-lieu fee project, the permit should not be issued until all relevant provi-sions of the mitigation plan have been substantively determined, to ensure that the DA permit accurately reflects all relevant provisions of the approved mitigation plan, such as performance standards.

(k) Coordination of mitigation banking instruments and DA permit issuance. In cases where initial establishment of the mitigation bank, or the develop-ment of a new project site under an umbrella banking instrument, involves activities requiring DA authorization, the permit should not be issued until all relevant provisions of the mitiga-tion plan have been substantively de-termined. This is to ensure that the DA permit accurately reflects all relevant provisions of the final instrument, such as performance standards.

(l) Project implementation. (1) The sponsor must have an approved instru-ment prior to collecting funds from permittees to satisfy compensatory mitigation requirements for DA per-mits.


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33 CFR Ch. II (7–1–12 Edition) § 332.8

(2) Authorization to sell credits to satisfy compensatory mitigation re-quirements in DA permits is contin-gent on compliance with all of the terms of the instrument. This includes constructing a mitigation bank or in- lieu fee project in accordance with the mitigation plan approved by the dis-trict engineer and incorporated by ref-erence in the instrument. If the aquat-ic resource restoration, establishment, enhancement, and/or preservation ac-tivities cannot be implemented in ac-cordance with the approved mitigation plan, the district engineer must con-sult with the sponsor and the IRT to consider modifications to the instru-ment, including adaptive management, revisions to the credit release schedule, and alternatives for providing compen-satory mitigation to satisfy any cred-its that have already been sold.

(3) An in-lieu fee program sponsor is responsible for the implementation, long-term management, and any re-quired remediation of the restoration, establishment, enhancement, and/or preservation activities, even though those activities may be conducted by other parties through requests for pro-posals or other contracting mecha-nisms.

(m) Credit withdrawal from mitigation banks. The mitigation banking instru-ment may allow for an initial debiting of a percentage of the total credits pro-jected at mitigation bank maturity, provided the following conditions are satisfied: the mitigation banking in-strument and mitigation plan have been approved, the mitigation bank site has been secured, appropriate fi-nancial assurances have been estab-lished, and any other requirements de-termined to be necessary by the dis-trict engineer have been fulfilled. The mitigation banking instrument must provide a schedule for additional credit releases as appropriate milestones are achieved (see paragraph (o)(8) of this section). Implementation of the ap-proved mitigation plan shall be initi-ated no later than the first full grow-ing season after the date of the first credit transaction.

(n) Advance credits for in-lieu fee pro-grams. (1) The in-lieu fee program in-strument may make a limited number of advance credits available to permit-

tees when the instrument is approved. The number of advance credits will be determined by the district engineer, in consultation with the IRT, and will be specified for each service area in the instrument. The number of advance credits will be based on the following considerations:

(i) The compensation planning frame-work;

(ii) The sponsor’s past performance for implementing aquatic resource res-toration, establishment, enhancement, and/or preservation activities in the proposed service area or other areas; and

(iii) The projected financing nec-essary to begin planning and imple-mentation of in-lieu fee projects.

(2) To determine the appropriate number of advance credits for a par-ticular service area, the district engi-neer may require the sponsor to pro-vide confidential supporting informa-tion that will not be made available to the general public. Examples of con-fidential supporting information may include prospective in-lieu fee project sites.

(3) As released credits are produced by in-lieu fee projects, they must be used to fulfill any advance credits that have already been provided within the project service area before any remain-ing released credits can be sold or transferred to permittees. Once pre-viously provided advance credits have been fulfilled, an equal number of ad-vance credits is re-allocated to the sponsor for sale or transfer to fulfill new mitigation requirements, con-sistent with the terms of the instru-ment. The number of advance credits available to the sponsor at any given time to sell or transfer to permittees in a given service area is equal to the number of advance credits specified in the instrument, minus any that have already been provided but not yet ful-filled.

(4) Land acquisition and initial phys-ical and biological improvements must be completed by the third full growing season after the first advance credit in that service area is secured by a per-mittee, unless the district engineer de-termines that more or less time is needed to plan and implement an in- lieu fee project. If the district engineer


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determines that there is a compen-satory mitigation deficit in a specific service area by the third growing sea-son after the first advance credit in that service area is sold, and deter-mines that it would not be in the pub-lic interest to allow the sponsor addi-tional time to plan and implement an in-lieu fee project, the district engineer must direct the sponsor to disburse funds from the in-lieu fee program ac-count to provide alternative compen-satory mitigation to fulfill those com-pensation obligations.

(5) The sponsor is responsible for complying with the terms of the in-lieu fee program instrument. If the district engineer determines, as a result of re-view of annual reports on the operation of the in-lieu fee program (see para-graphs (p)(2) and (q)(1) of this section), that it is not performing in compliance with its instrument, the district engi-neer will take appropriate action, which may include suspension of credit sales, to ensure compliance with the in-lieu fee program instrument (see paragraph (o)(10) of this section). Per-mittees that secured credits from the in-lieu fee program are not responsible for in-lieu fee program compliance.

(o) Determining credits. (1) Units of measure. The principal units for credits and debits are acres, linear feet, func-tional assessment units, or other suit-able metrics of particular resource types. Functional assessment units or other suitable metrics may be linked to acres or linear feet.

(2) Assessment. Where practicable, an appropriate assessment method (e.g., hydrogeomorphic approach to wetlands functional assessment, index of biologi-cal integrity) or other suitable metric must be used to assess and describe the aquatic resource types that will be re-stored, established, enhanced and/or preserved by the mitigation bank or in- lieu fee project.

(3) Credit production. The number of credits must reflect the difference be-tween pre- and post-compensatory mitigation project site conditions, as determined by a functional or condi-tion assessment or other suitable met-ric.

(4) Credit value. Once a credit is deb-ited (sold or transferred to a per-mittee), its value cannot change.

(5) Credit costs. (i) The cost of com-pensatory mitigation credits provided by a mitigation bank or in-lieu fee pro-gram is determined by the sponsor.

(ii) For in-lieu fee programs, the cost per unit of credit must include the ex-pected costs associated with the res-toration, establishment, enhancement, and/or preservation of aquatic re-sources in that service area. These costs must be based on full cost ac-counting, and include, as appropriate, expenses such as land acquisition, project planning and design, construc-tion, plant materials, labor, legal fees, monitoring, and remediation or adapt-ive management activities, as well as administration of the in-lieu fee pro-gram. The cost per unit credit must also take into account contingency costs appropriate to the stage of project planning, including uncertain-ties in construction and real estate ex-penses. The cost per unit of credit must also take into account the resources necessary for the long-term manage-ment and protection of the in-lieu fee project. In addition, the cost per unit credit must include financial assur-ances that are necessary to ensure suc-cessful completion of in-lieu fee projects.

(6) Credits provided by preservation. These credits should be specified as acres, linear feet, or other suitable metrics of preservation of a particular resource type. In determining the com-pensatory mitigation requirements for DA permits using mitigation banks or in-lieu fee programs, the district engi-neer should apply a higher mitigation ratio if the requirements are to be met through the use of preservation credits. In determining this higher ratio, the district engineer must consider the rel-ative importance of both the impacted and the preserved aquatic resources in sustaining watershed functions.

(7) Credits provided by riparian areas, buffers, and uplands. These credits should be specified as acres, linear feet, or other suitable metrics of riparian area, buffer, and uplands, respectively. Non-aquatic resources can only be used as compensatory mitigation for im-pacts to aquatic resources authorized by DA permits when those resources are essential to maintaining the eco-logical viability of adjoining aquatic


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resources. In determining the compen-satory mitigation requirements for DA permits using mitigation banks and in- lieu fee programs, the district engineer may authorize the use of riparian area, buffer, and/or upland credits if he de-termines that these areas are essential to sustaining aquatic resource func-tions in the watershed and are the most appropriate compensation for the authorized impacts.

(8) Credit release schedule. (i) General considerations. Release of credits must be tied to performance-based mile-stones (e.g., construction, planting, es-tablishment of specified plant and ani-mal communities). The credit release schedule should reserve a significant share of the total credits for release only after full achievement of ecologi-cal performance standards. When deter-mining the credit release schedule, fac-tors to be considered may include, but are not limited to: The method of pro-viding compensatory mitigation cred-its (e.g., restoration), the likelihood of success, the nature and amount of work needed to generate the credits, and the aquatic resource type(s) and function(s) to be provided by the miti-gation bank or in-lieu fee project. The district engineer will determine the credit release schedule, including the share to be released only after full achievement of performance standards, after consulting with the IRT. Once re-leased, credits may only be used to sat-isfy compensatory mitigation require-ments of a DA permit if the use of cred-its for a specific permit has been ap-proved by the district engineer.

(ii) For single-site mitigation banks, the terms of the credit release schedule must be specified in the mitigation banking instrument. The credit release schedule may provide for an initial debiting of a limited number of credits once the instrument is approved and other appropriate milestones are achieved (see paragraph (m) of this sec-tion).

(iii) For in-lieu fee projects and um-brella mitigation bank sites, the terms of the credit release schedule must be specified in the approved mitigation plan. When an in-lieu fee project or umbrella mitigation bank site is imple-mented and is achieving the perform-ance-based milestones specified in the

credit release schedule, credits are gen-erated in accordance with the credit re-lease schedule for the approved mitiga-tion plan. If the in-lieu fee project or umbrella mitigation bank site does not achieve those performance-based mile-stones, the district engineer may mod-ify the credit release schedule, includ-ing reducing the number of credits.

(9) Credit release approval. Credit re-leases for mitigation banks and in-lieu fee projects must be approved by the district engineer. In order for credits to be released, the sponsor must submit documentation to the district engineer demonstrating that the appropriate milestones for credit release have been achieved and requesting the release. The district engineer will provide cop-ies of this documentation to the IRT members for review. IRT members must provide any comments to the dis-trict engineer within 15 days of receiv-ing this documentation. However, if the district engineer determines that a site visit is necessary, IRT members must provide any comments to the dis-trict engineer within 15 days of the site visit. The district engineer must sched-ule the site visit so that it occurs as soon as it is practicable, but the site visit may be delayed by seasonal con-siderations that affect the ability of the district engineer and the IRT to as-sess whether the applicable credit re-lease milestones have been achieved. After full consideration of any com-ments received, the district engineer will determine whether the milestones have been achieved and the credits can be released. The district engineer shall make a decision within 30 days of the end of that comment period, and notify the sponsor and the IRT.

(10) Suspension and termination. If the district engineer determines that the mitigation bank or in-lieu fee program is not meeting performance standards or complying with the terms of the in-strument, appropriate action will be taken. Such actions may include, but are not limited to, suspending credit sales, adaptive management, decreas-ing available credits, utilizing finan-cial assurances, and terminating the instrument.

(p) Accounting procedures. (1) For mitigation banks, the instrument must


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contain a provision requiring the spon-sor to establish and maintain a ledger to account for all credit transactions. Each time an approved credit trans-action occurs, the sponsor must notify the district engineer.

(2) For in-lieu fee programs, the in-strument must contain a provision re-quiring the sponsor to establish and maintain an annual report ledger in ac-cordance with paragraph (i)(3) of this section, as well as individual ledgers that track the production of released credits for each in-lieu fee project.

(q) Reporting. (1) Ledger account. The sponsor must compile an annual ledger report showing the beginning and end-ing balance of available credits and permitted impacts for each resource type, all additions and subtractions of credits, and any other changes in cred-it availability (e.g., additional credits released, credit sales suspended). The ledger report must be submitted to the district engineer, who will distribute copies to the IRT members. The ledger report is part of the administrative record for the mitigation bank or in- lieu fee program. The district engineer will make the ledger report available to the public upon request.

(2) Monitoring reports. The sponsor is responsible for monitoring the mitiga-tion bank site or the in-lieu fee project site in accordance with the approved monitoring requirements to determine the level of success and identify prob-lems requiring remedial action or adaptive management measures. Moni-toring must be conducted in accord-ance with the requirements in § 332.6, and at time intervals appropriate for the particular project type and until such time that the district engineer, in consultation with the IRT, has deter-mined that the performance standards have been attained. The instrument must include requirements for periodic monitoring reports to be submitted to the district engineer, who will provide copies to other IRT members.

(3) Financial assurance and long-term management funding report. The district engineer may require the sponsor to provide an annual report showing be-ginning and ending balances, including deposits into and any withdrawals from, the accounts providing funds for financial assurances and long-term

management activities. The report should also include information on the amount of required financial assur-ances and the status of those assur-ances, including their potential expira-tion.

(r) Use of credits. Except as provided below, all activities authorized by DA permits are eligible, at the discretion of the district engineer, to use mitiga-tion banks or in-lieu fee programs to fulfill compensatory mitigation re-quirements for DA permits. The dis-trict engineer will determine the num-ber and type(s) of credits required to compensate for the authorized impacts. Permit applicants may propose to use a particular mitigation bank or in-lieu fee program to provide the required compensatory mitigation. In such cases, the sponsor must provide the permit applicant with a statement of credit availability. The district engi-neer must review the permit appli-cant’s compensatory mitigation pro-posal, and notify the applicant of his determination regarding the accept-ability of using that mitigation bank or in-lieu fee program.

(s) IRT concerns with use of credits. If, in the view of a member of the IRT, an issued permit or series of issued per-mits raises concerns about how credits from a particular mitigation bank or in-lieu fee program are being used to satisfy compensatory mitigation re-quirements (including concerns about whether credit use is consistent with the terms of the instrument), the IRT member may notify the district engi-neer in writing of the concern. The dis-trict engineer shall promptly consult with the IRT to address the concern. Resolution of the concern is at the dis-cretion of the district engineer, con-sistent with applicable statutes, regu-lations, and policies regarding compen-satory mitigation requirements for DA permits. Nothing in this section limits the authorities designated to IRT agen-cies under existing statutes or regula-tions.

(t) Site protection. (1) For mitigation bank sites, real estate instruments, management plans, or other long-term mechanisms used for site protection must be finalized before any credits can be released.


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Documents

Pt. 332 33 CFR Ch. II (7–1–12 Edition) · Army, acting through the Chief of En- ... alter the regulations at §320.4(r) of this title, which address the general mitiga-tion requirements